[Raised $27.5 million] Ep.119 - The First 100 with Jules Veyrat, the Co-founder & CEO of Stoik | Insurtech | B2B2C Model

Jules Veyrat is the co-founder of Stoik, an insurtech that sells cyber services to SMEs. Specifically, Stoik combines security software to mitigate risk levels and an insurance offer that transfers residual risk to a third party. Stoik has now raised $27.5 million since its 2021 inception from notable investors such as Munich Re Ventures, Opera Tech Ventures, Andreessen Horowitz, and Alven.

The company doesn’t sell its insurance product on its website anymore. Instead, it works with third-party insurance brokers. Around 1,500 brokers offer Stoïk products to their clients. The company reports approximately 2,000 policies enacted and says that the 10-million gross written premium landmark is within its sights and expected to be achieved by year's end.

Where to find Jules Veyrat:

• Website: Stoïk | Insurance designed for cyber risk (stoik.io)
• LinkedIn (7) Jules Veyrat | LinkedIn

Where to find Hadi Radwan:

• Newsletter: Principles Friday | Hadi Radwan | Substack
• LinkedIn: Hadi Radwan | LinkedIn

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Transcript

Let's do it. Broadcasting from around the world. You're listening to the first 100. A podcast on how founders acquired their first 100 paying customers. Here's your host, Hadi Rodwund. Good to have you on the show Jules, how are you doing today? I'm doing great. Thanks for having me. Amazing Jules, amazing. You're doing something very interesting in the insurance space. It's cyber, which is the new virus in the world that's attacking us. Let me start with a quick introduction before we dive into the podcast. So Jules Vera is the co-founder of Stoic, which is an insure tech that sells cyber services to SMEs specifically, you combine security software. to mitigate risk levels and an insurance offer as well to protect from attacks. You've raised to date around $27.5 million since your inception in 2021 from notable investors such as MiniCree and Rieson Horowitz and Opera Tech Ventures. Your company is doing extremely well. You have 2,000 policies, 1,500 brokers. You're almost crossing the 10 million GWP. premium landmark. But before we dive into all of this, tell us how did you come to create Stork? Well, thanks for the introduction. First edge was that SME executives, when they hear about cyber attacks, have two opposite reactions. First is, I know it can happen to me. I know it can kill my company. I even know it's the number one risk for me because they've heard that it kills other companies that a bad cyber attack or ransomware can just interrupt their business. But in the meantime, I don't do anything. I don't know where to start. I don't know what to do with such a risk because I'm not technical enough. I don't have any technical enough people in my company. So that's what fascinated me at first. How can there be such a gap between the level of risk and the level of action against such a risk? Why did I launch an InsureTech? Well, because I like the idea that we can align the interest with the executives and say we are going to offer you to transfer your risk to a third party, to an insurer, that if you get attacked, we take care of everything, the financial, technical, legal consequences of the attack. But as soon as you transfer it, we have the same interest. We don't want you to get attacked. So We'll do everything we can. We'll build cybersecurity software. We'll offer you service with our tech and cyber teams with the insurance product to help you not be attacked. And everything we can do, we do it for free because we have, once again, the same interest. You don't want to get attacked. I don't want you to get attacked. So that's this very simple idea we had, combine insurance and security for just the price of insurance because at the end, what I want is protect SME executives and to make sure they don't get attacked. Amazing. I think the value proposition is very straightforward because essentially you're going to this company and say I'm going to protect you for free. You're just going to buy the insurance from me in case something gets missed out. You get back a small remuneration out of this. The value proposition is very clear. How did you decide if you go direct to the customer like all of these big insure techs before? or use a broker or an agent to sell through them and then direct to the customer? Well, actually, the market decided for me. I started believing we would go direct to SMEs. So I spent the first few weeks of the company when we had our insurance product, speaking with SME executives and saying, you should buy our insurance policy. I got a first few contracts, but not 100, because many of them, after weeks of thinking... about a budget of like 3000 per year, finished telling me, well, I'm convinced I should buy an insurance policy. Let me ask my broker. That's how I understood I should absolutely go through brokers if I wanted to grow in this area. So I started building relationships with brokers. I stopped radically doing direct distribution because the two of them in the meantime is hard to combine. And we made our policies and our strategy around brokers. So before you had 2000. Take us back to the early days. What was your early acquisition strategy? How did you reach out to the first hundred customers? Well, once again, I'm not speaking with the end customers. My customers are the brokers. What I want is to prove to a broker that he would rather work with me than with AXA or with top insurance companies. What brokers want is to find the best solution for their customers. good conditions, cheap and good wording, good coverage, and to make sure that when there is a claim, the claim is going to be well handled. Well, we built our USPs on those three elements. Easy underwriting, good coverage. We are not the cheapest. We don't wanna be. We want to be still here in a few years, so we are careful and we're still careful not just paying on the price level, but we also invested a lot since the beginning on the claim management. So we built. a team in-house that's able to manage cyber incidents 24-7, to pick up the phone when there's a cyber attack and to intervene to help the insure. And that's something that brokers valued a lot because they know how important it is to be reactive for them when there's a claim. The pitch we had when we came to brokers, at the beginning, a broker doesn't like to change from a traditional incumbent player to a new insure tech. So it took us weeks. to build confidence with them. Maybe we would have been faster by going direct, but the long-term strategy was the good one because as soon as you build trust with them, as they feel like you are good and you are delivering the promises, then you start getting their customers and build a significant portfolio with them. Amazing. I have to follow up questions on these because you touched on very important points that are essentially... can be used in other industries. One, if you're a startup and you're competing with the incumbent, the first hurdle you have to pass is the reputation and the brand. Incumbents have built a great reputation and great brand, which is associated with paying claims because insurance essentially is a promise, right? So you're promising someone, give me your money today, maybe I'll pay in the future. And that the promise is linked to the trust and the brand. So first question is how did you actually build up your reputation to overcome this. And then the second part is the claims. You mentioned something which is sometimes not very common in the MGA insure tech space is the claims is outsourced to the carrier you're working with. In your case, you kept it in. Now, so what was your thought process on this? So two pretty different questions on the first one building the reputation. It's the most challenging part of course, of what we do. I see three levels that we had. at the beginning to build this reputation. One is who are the carriers supporting you? We are an NGA, so we don't carry the risk by ourselves. And we were lucky to build a partnership with Sweet3, number two, Reinsure and the World, supporting us, providing capacity, which was great because every broker knows Sweet3. So they know you're supported by well-established brands. Number two, who are the investors you have with you? and supporting you and giving you their money. We had some great angels like the former CEO of AXA on the cap table that helped build a lot of confidence with them. And number three, who are the people inside your company? What's their reputation? And making the first hires from the insurance industry was a great way to build confidence. When you hire the top underwriter from the competition and he comes to you, then brokers are like, okay, I know this guy. I know he's trustworthy. I want to work with this in SureTech. That's how we did it. Of course, takes time. And then of course, first way is start getting claims and paying for claims and proving the value, proving the promise, but you can do it at the very beginning. And to come to your second question, cyberclaims are a bit different from other types of claims because people that pick up the phone when there is an incident are technical people, not claim management people. The team that... is available 24-7 for us is a search team. So a security emergency team that picks up the phone because the impact of the reactivity of the team that picks up the phone when we get the call saying that we have a cyber attack, the impact of the team on the final cost of the claim is from one to a hundred. If we react quickly, well, efficiently, we work at night. then the company will be able to start again quickly with no business interruption. If we wait, if we are long, we are going to lose days of business interruption that we'll have to pay for the company. I can take an example. Recently, we had an e-commerce company with like 40 million GWP, so 40 million turnover, reaching out on a Friday night, 6 p.m., saying, we have ransomware, we don't do any more sales, the website is blocked. they were making 300K of margin per day. So every day without activity is 300K that we have to pay them. We have in our policy, 12 hours business interruption deductible. So we don't pay for the first 12 hours, which is good, competitive. My team worked from 6 p.m. on Friday evening to 4 a.m. on Saturday morning, so that we are in the business interruption deductible. And the company is back the day after. The company is happy, they could do the full day with no impact on their reputation. I was happy because I was only charging for the assistance, the technical assistance, no business direction. That would never have been possible with a third party. They would not have worked all night the same way. So if you were to rank today underwriting or claims, which one would you put your tech efforts in? Well, I would not say claim is tech. It's not the same teams for me. The tech teams are working on the underwriting and the prevention tools, everything we offer automatically to all of the inshorts. And they are all the tech effort is on them to make everything simple, automated and easy to use for the brokers and for the inshorts. The claims team is a more technical team. What's important is the quality and the efficiency of the intervention, but more on the cyber way than the tech way. Amazing. Take us back to the time where you were identifying your customer profile. So you're focusing on SMEs, but you could have gone mid-market or up market from day one. What was your thought process? How did you come to that conclusion? Part of the thought process was up to me and part was not. Up to me is the coverage of SMEs against cyber attacks is super low, while all the great, the big companies have cyber coverage. So it's harder to compete and to open a new market. But what's not up to me is that what I sell is a limit of guarantee. And I need a carrier. I mentioned Swiss Re. We now work with Tokyo Marine, HTC. I need carriers to trust me and to let me offer limits. At first, the first limit I was allowed to provide with them was one million. I'm not covering much of an enterprise with one million limits. So I had to target the SMEs. All in all. it made a lot of sense to target SMEs. Amazing. What is or was the hardest part of building a B2B2C insurtech? I think if your question relies to the B2B2C part, it's the different timing between my timing of an insurtech that needs to grow quickly to prove results to investors and insurance brokers that don't have the same timing. They just need their customer to be happy It's never a question of days. It's always a question of weeks, sometimes months. You can't and you should not put too much pressure on your brokers to do more business. I mean, you have to, but not too much. And that's the most difficult part for us to understand. I hired some salespeople that were from the SaaS industry and these guys could not understand the difference between when you speak direct to a customer and when you speak to a broker. You just can't speak the same way. So the best sales for us and now all of the sales technically for us are people that are experienced in the insurance industry and know how to build a strong relationship with the broker. You've raised recently around 10 million and your plan is to expand to Germany. How do you usually think of an expansion playbook? What needs to be done prior to going live in a new country? Yeah, we are now operational in Germany. We have our first few policies and just the beginning, but that's great. And it was a long process. You need to have a local approach of all those markets. In the insurance industry, you can't, we should not believe that because we are good and big enough in France, we are able to replicate what we do in the German markets. So we had to start not from scratch, but nearly from scratch, a lot of things like building an insurance product in the German language with a German competitive pricing. with the German back office, I mean, the back office that's adapted to the way German brokers work, which is not the same way as the French brokers work. And of course, building a local team. The tech team, ops team, product team, tech product team can stay in France and do it for Germany as long as you have some local people. But you need to have local sales, local underwriters, local claim managers, local security engineers. That makes quite a team that you need since day one to be able to start. We did it. as quickly as we could. We've been pretty quick. That was great, but that's a lot of work, but that needs to be done if you want to be successful. Is there any crucible moment or an inflection point at the life of Stoic where things would have gone either way? Is there a moment that you could share with us? Well, yeah, I think it took us a few months before we actually decided to radically stop direct distribution. At first, Since we had started with direct distribution and we had a good branding in the market, we kept having some inbound customers that will reach out to us and ask for a policy. We would sell them the policy direct if they had no broker request. But as we grew, we had an increasing number of direct leads, not outbound, but inbound, and of course an increasing activity with brokers. We believed we could keep the two of them in the meantime. But the brokers started seeing that some of their customers were coming direct to us and that began to be a problem for them, which I totally understand. And that's a problem, like a good problem when you start getting big in two channels. So we had to make a decision and some brokers said, you are either a competitor to us or a partner. Well, we made our choice and decided to be a partner because we had to and we would not have been able to compete. And that was a critical moment for us for Stoic. When we had to tell the teams, we are going to stop radically by today, doing any direct distribution. And I feel much better in my shoes now. Amazing. I mean, it's always difficult when something is working and then you have to take a risk on something else. What was your early acquisition strategy or strategy that worked to get more and more of these? brokers come in because maybe there's some of them which come because of your network or your investors have introduced you but you have a 1500 so what has worked for you in terms of onboarding these producers efficiently? Well, actually I have a thousand five hundred onboarding on the platform maybe five hundred of them made one policy or more but It's not my strategy to speak with much more in the French market Of course, I'm adding new ones in Germany. The main strategy for me is to deepen the relationship with the top ones. That's where there's most business for me. And out of the 500 or out of the 1,500, there are 200 top ones that are going to be, to do not 80% but 95% of my business in the coming years. So to get back to your question, reaching out and getting the first contact with the top 200 is... Pretty easy because the list is finished. I'm speaking with the French market, not the US one where you have thousands of top ones maybe, but my list is finished. And so we had just to find a way to get a first relationship with all of them and then build and strengthen the relationship for the rest of them. The long tail. Well, marketing communication is enough to have them come to you and say, Hey, I'd like to learn about your cyber approach. The world of mouse, of course is where he's working quite well. but I'm not putting too much energy or money on it because I know most of my value is from the real the real-ish chip I'm building with the top ones. Amazing. So the cyberspace is quite competitive. We've seen before Stoic, there was big companies in the US that raised like nine figures in terms of funding. What keeps you up at night if these folks are either in the French market or might come to the French market? I think... I've seen with the German market how difficult it is to adapt from a market to another one. And yet, we are French, we live a few hundred kilometers away from Germany, so we know pretty well how they work and I have a ton of connections with them. So US players thinking of coming to Europe, I think we'll have a hard time adapting to the new markets in a new language. which is radically different from English speaking. So to be honest, that's not what keeps me awake at night. What keeps me awake at night is can we grow faster? Of course, with keeping the good risk management that we have today, both in France and in Germany, what are the levels we have? And I'm satisfied at the end of the day, if of course our loss ratio is still as good as it is today, and we've done enough new business with the top brokers that we are targeting. Competition. is not my number one concern because there's room for many players and it's going to be easy for no one. So there's a first mover advantage that we took in France that we are going to take in Germany, even if there's already some competition, and that we are going to take hopefully in other European countries in the coming months. What's your superpower? I think what we try to combine is hard work and confidence. I don't know if that's your answer, your question. But I'm pretty convinced that success is always a result of hard work or talent, but mostly hard work and confidence in the fact that you're going to succeed. At the beginning, when I launched Loic, I don't know how I could have so much confidence because there was tons of obstacles, but thanks to maybe absurd confidence, maybe my confidence today is still absurd or nonsensical, but I have it and I have a team, so I have, I trust them and we work hard. So in the end, I think that's what makes us succeed so far. Hopefully, it's enough in the coming years. What's the principle that you live by that has made you successful in your career? It's too early to say I'm successful in my career. We just built a company two and a half years ago and we are doing well, but far from when I want it to be. One principle that's one of the main ones in stoic culture is reliability. I believe we discussed it already, the main... The difficult part of what we do when you are an insurtech doing insurance against cyber attacks is to build trust, because people don't trust insurers, are scared of cybersecurity and don't trust insurtechs. Trust can be made by continuous proof of reliability. That is to say, when we make a commitment, we respect it. In SideStory, can with our partners, I insist a lot on reliability being on time in everything we do. If I say, I will send you the documents tomorrow, you'll receive it tomorrow for sure. If I say it will be 10,000, you'll pay 10,000, not one euro more. And I think that's something important for building trust in the long term. One last question, Jules. What's next for Storch? I think I had a pretty simple pitch since the beginning with my investors. We started with a triple niche. We started targeting SMEs in France. on cyber insurance. We are continuously expanding from those three nations. First by growing from SMEs to mid-sized companies, we started with 50 million turnover companies and 1 million limits. We now do 500 million euro companies with 5 million limit, which is a significant progress. Second, by expanding from France to continental Europe, we started with Germany. We'll of course keep expanding to new European countries. And third, we have built a network. of brokers that trust us about cyber. It's going to be the next steps of our life to expand on new insurance lines that are not too far from what we know how to do. We don't want to be like a wholesale broker that sells off-the-shelf product. We want to have our own underwriting expertise, but there's a lot of expansion that's possible about it. So that's the next steps for us. Thank you, Jules, very much for this amazing episode. How can people reach you and are you hiring? People can reach me on LinkedIn. I answer to all the messages I receive on LinkedIn. Most of the time to say sorry, I don't have time, but I do answer, of course, so happy to speak. Am I hiring? Yes. In the German market. Any talent in the cyber insurance industry or insurance industry or cyber industry in Germany, please reach out. I'd be happy to speak. Amazing. Jules, we wish you the best of luck on your journey and thank you again for stopping by. Thanks, Hadi. Thank you so much for listening to the first 100. We hope it inspired you in your journey. If you're enjoying the podcast, please subscribe to our podcast on Apple iTunes, Stitcher, Google Play, or Spotify, and share it with a friend starting their entrepreneurship journey. 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